Yashi Multimedia Pvt. Ltd., Mumbai V. ITO, New Delhi

ITA 3735/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 3949 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 8 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Assessment Year: 2011-2012
• Appeal Filed On: 08-06-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Gift; Principle of natural justice; Initiation of penalty proceedings; Assessment record
• Section: 14A

Judgement Text

1 ITA NO. 3735/DEL/2017 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: G NEW DELHI BEFORE SHRI N. K. BILLAIYA, ACCOUNTANT ME MBER AND MS SUCHITRA KAMBLE, JUDIC IAL MEMBER ITA NO. 3735/DEL/2017 ( A .Y 2011-12) YASHI MULTIMEDIA PVT. LTD. NO. 5, KARTAR KUNJ, GOLDEN BEACH SOCIETY, RUIA PARK, JUHU, MUMBAI AAACY1714C (APPELLANT) VS ITO WARD-27(4) NEW DELHI (RESPONDENT) APPELLANT BY SH. SANAT KAPOOR, ADV RESPONDENT BY SH. H. K. CHOUDHARY CIT DR ORDER PER SUCHITRA KAMBLE, JM THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE OR DER DATED 19/12/2016 PASSED BY CIT(A)-9, NEW DELHI, FOR ASSESSMENT YEAR 2011-12. 2. THE GROUNDS OF APPEAL ARE AS UNDER:- 1. THAT THE LEARNED COMMISSIONER OF INCOME-TAX (APPEA LS) ERRED IN PASSING THE ORDER WITHOUT GIVING SUFFICIENT OPPORTUNITY TO THE APPELLANT FOR REPRESENTATION OF ITS CASE. THAT THE NOTICES WERE N OT SERVED UPON THE APPELLANT AT ITS ADDRESS AS STATED IN THE RECORDS. 2. THAT THE OBSERVATIONS MADE IN THE ASSESSMENT ORDER ARE CONTRARY OF THE FACTS ON RECORD AND THE ADDITIONS HAVING BEEN MADE ON SURMISES AND DATE OF HEARING 20.02.2020 DATE OF PRONOUNCEMENT 02.03.2020 2 ITA NO. 3735/DEL/2017 CONJECTURES, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE OBSERVATIONS MADE BY THE ASSESSING OF FICER, WITHOUT LOOKING INTO THE ASSESSMENT RECORD TO ARRIVE AT INDEPENDENT FINDINGS. 2.1 THAT THE LEARNED LOWER AUTHORITIES FAILED TO UN DERSTAND AND APPRECIATE THE NATURE OF ASSESSEES' BUSINESS. 3. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOL DING THE ADDITION OF RS. RS. 20,59,521/- UNDER THE HEADS 'BUSINESS PROMOTION ' AND 'GIFTS AND PRESENTATIONS'. 4. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE DISALLOWANCE OF RS. 24,00,000/- BEING THE AMOUNT PA ID TO SHRI VIVEK OBEROI AS 'PROFESSIONAL FEE'. 5. THAT ON THEFACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED, COMMISSIONER OF INCOME-TAX (APPEALS) E RRED IN UPHOLDING THE DISALLOWANCE OF RS. 17,18,000/- BEING 'CO-ORDINATIO N FEES' AND 'GYM TRAINING & FITNESS EXPENSES'. 6. THAT ONTHEFACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THELEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ER RED IN UPHOLDING THE ADDITION OF RS. 74,28,058/- U/S 68 OF THE INCOME-TA X ACT, 1961, ON ACCOUNT OF CREDIT ENTRIES APPEARING IN ASSESSEES' BANK ACCOUNT . 7. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (A PPEALS) ERRED IN UPHOLDING THE ADDITION OF RS. 6,400/-. 8. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE 3 ITA NO. 3735/DEL/2017 LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOLDING THE DISALLOWANCE OF RS. 28,249/- U/S 14A OF THE INCOME- TAX ACT, 1961. 9. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOL DING THE DISALLOWANCE OF RS. 50,000/- UNDER THE HEAD 'OPERATING & ADMINISTRA TIVE EXPENSES'. 10. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN UPHOL DING THE DISALLOWANCE OF RS. 2,36,000/- ALLEGEDLY BEING DONATIONS, WITHOUT A PPRECIATING THE NATURE OF EXPENDITURE. 11. THAT ON THE FACTS AND CIRCUMSTANCES OF THE CASE AN D IN LAW, THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS) OUGHT TO HAVE HELD THAT NO CASE IS MADE OUT FOR INITIATION OF PENALTY PROCEEDINGS U/S 271(L)(C) OF THE ACT. 3. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF PROVIDING CREATIVE SERVICES IN THE FIELD OF CONSUMER RETAILING, ENTERT AINMENT, CELEBRITY, MANAGEMENT, CELEBRITY HEALTHCARE MANAGEMENT, MEDIA COMMUNICATION, PRODUCTION DISTRIBUTION OR MARKETING OF UNDERGROUND DEVELOPMENT MUSIC AND OTHER RELATED SERVICES. DURING THE HEARING, THE AS SESSEE COMPANY E-FILED ITS RETURN OF INCOME ON 13/8/2012 DECLARING TOTAL INCOM E OF RS. 6,44,639/-. THE ASSESSEE DECLARED GROSS RECEIPTS OF RS. 2, 36,64,37 6/- AND AFTER CLAIMING VARIOUS EXPENSES DECLARED NET PROFIT OF RS. 7,00,57 2/-(2.96%) AS AGAINST THAT OF PREVIOUS YEAR AT RS. 23,35,535/-(8.94%) AGAINST GRO SS RATES OF RS. 2,61,11,640/-. THE ASSESSING OFFICER MADE ADDITI ON OF RS. 6,400/- AS THE ASSESSEE COULD NOT FILE ANY DOCUMENTARY EVIDENCE AS PER THE CLAIM OF THE ASSESSEE. THE ASSESSING OFFICER FURTHER MADE ADDIT ION OF RS. 28,249/- IN RESPECT OF DISALLOWANCE U/S 14A OF THE ACT. THE AS SESSING OFFICER FURTHER MADE ADDITION OF RS. 50,000/- IN RESPECT OF EXPENDITURE NOT INCURRED WHOLLY AND EXCLUSIVELY FOR BUSINESS PURPOSE. THE ASSESSING OF FICER MADE ADDITION OF RS. 2,36,000/-IN RESPECT OF DONATION MADE. THE ASSESSI NG OFFICER MADE ADDITION 4 ITA NO. 3735/DEL/2017 OF RS. 20,59,521/- AS REGARDS TO EXPENSES MADE TO T HE WELL KNOWN ACTOR DIRECTOR OF THE FILM INDUSTRY AT THEIR PERSONAL BEH ALF. THE ASSESSING OFFICER ALSO MADE ADDITION OF RS. 24, 00,00/- IN ABSENCE OF ANY JUSTIFICATION FOR THE PAYMENTS MADE TO SHRI VIVEK OBERIO AS REMUNERATION UNDER THE HEAD PROFESSIONAL FEES WHICH IS NOT ALLOWABLE U/S 40A(2B ) OF THE ACT. THE ASSESSING OFFICER FURTHER MADE DISALLOWANCE OF RS. 17,18,000 /- U/S 40 A(IA) OF THE ACT AND FINALLY THE ASSESSING OFFICER MADE ADDITION OF RS. 74,28,058,/- U/S 68 OF THE INCOME TAX ACT, ON IN ABSENCE OF ANY DETAILED E XPLANATION IN RESPECT OF SOURCE OF CREDIT INDUSTRIES IN ITS BOOKS OF ACCOUNT S. 4. BEING AGGRIEVED BY THE ASSESSMENT ORDER, THE ASS ESSEE FILED APPEAL BEFORE THE CIT(A). THE CIT(A) PARTLY ALLOWED THE APPEAL O F THE ASSESSEE. 5. THE LD. AR SUBMITTED THAT THE CIT(A) ISSUED THE NOTICE WHICH WERE NOT AT ALL RECEIVED BY THE ASSESSEE AND THE ORDER OF TH E CIT(A) IS EX-PARTE ORDER WITHOUT GIVING HEARING TO THE ASSESSEE. THEREFORE, THE LD. AR SUBMITTED THAT THE MATTER MAY BE REMANDED BACK TO THE FILE OF THE CIT(A) GIVING THE ASSESSEE SUFFICIENT OPPORTUNITY TO REPRESENT HIS CASE ON THE BASIS OF DOCUMENTS FILED BEFORE THE REVENUE AUTHORITIES. 6. THE LD. DR SUBMITTED THAT PROPER OPPORTUNITIES W ERE GIVEN TO THE ASSESSEE BY THE CIT(A) BUT THE SAME WAS NOT AVAILE D BY THE ASSESSEE DURING THE APPELLATE PROCEEDINGS BEFORE THE CIT(A). THE L D. AR FURTHER SUBMITTED THAT CIT(A) HAS TAKEN COGNIZANCE OF ALL THE EVIDENCES FI LED BEFORE THE ASSESSING OFFICER AND HAS GIVEN A FINDING ON MERIT. IN-FACT , THE CIT(A) HAS PARTLY ALLOWED THE APPEAL OF THE ASSESSEE. THEREFORE, THERE IS NO NEED TO REMAND BACK THE APPEAL OF THE ASSESSEE TO THE FILE OF THE CIT(A). 7. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. FROM THE PERUSAL OF THE ORDER OF THE CIT(A ), IT APPEARS THAT THE CIT(A) IS SILENT ON WHETHER THE NOTICES WERE PROPERLY SERV ED TO THE ASSESSEE OR NOT. 5 ITA NO. 3735/DEL/2017 MERELY ISSUING NOTICE DOES NOT ALLOW THE CIT(A) TO PROCEED WITH THE MATTER EX- PARTE. IT WILL BE APPROPRIATE TO REMAND BACK THIS MATTER TO THE FILE OF THE CIT(A) FOR FRESH ADJUDICATION BY GIVING OPPORTUNITY OF HEA RING TO THE ASSESSEE. NEEDLESS TO SAY, THE ASSESSEE BE GIVEN OPPORTUNITY OF HEARING BY FOLLOWING PRINCIPAL OF NATURAL JUSTICE. THE APPEAL OF THE AS SESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. 8. IN RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND MARCH, 2020. (N. K. BILLAIYA) (SUCHITRA KAMBLE) ACCOUNTANT MEMBER JUDICIAL MEMBE R DATED: 02 /03/2020 R. NAHEED COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI 6 ITA NO. 3735/DEL/2017 DATE OF DICTATION 20.02.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 21.02.2020 DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE OTHER MEMBER DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. PS/PS DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. PS/PS 0 2 .0 3 .2020 DATE ON WHICH THE FINAL ORDER IS UPLOADED ON THE WEBSITE OF ITAT 0 2 .0 3 .2020 DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 0 2 .0 3 .2020 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER DATE OF DISPATCH OF THE ORDER